Sir Keir Starmer is facing a setback as his acclaimed trade agreement with the US further crumbles due to the abandonment of a plan to reduce steel tariffs.

Just over four months after the Prime Minister celebrated his ‘excellent’ agreement with Donald Trump, it has come to light that heavy duties on British steel will persist. 

The UK Government is believed to have halted efforts to decrease the tariffs, which currently stand at 25 percent, to zero as had been initially planned earlier this year.

According to sources from Whitehall, it is now apparent that the initial proposal for zero tariffs on UK steel will not be realized, marking a severe setback for the struggling industry.

The so-called arrangement, which included cars and steel, was declared by Sir Keir in May following Mr. Trump’s announcement of extensive tariffs on imports to America.

But the steel proposals have never been brought in due to US concerns they could open up a back-door route for cheap Chinese imports into America.

As the Prime Minister readies to meet with Mr. Trump during the US President’s second state visit to the UK this week, he faces criticism for seemingly relinquishing efforts on the steel issue.

Trade experts swiped that the Labour Government had ‘mistaken having a trade deal dictated to them for their own negotiating brilliance’.

Officials spent recent days in Washington desperately trying to revive the zero per cent plan.

But the idea has now been shelved, with the PM focused instead on securing a ‘permanent’ 25 per cent tariff – half the rate paid by the rest of the world.

The climbdown is embarrassing for the PM, who hailed the original agreement in May as a ‘historic’ deal which would save thousands of British jobs.

Gareth Stace, director general of UK steel, told Times Radio this morning: ‘I’d be lying if I didn’t say that we weren’t, as the steel sector in the UK, disappointed not to get the zero tariff deal with the US that was announced on 8 May.

‘However, we know that Government has worked night and day tirelessly to get this deal and it’s not within the UK government’s gift to grant it.

‘It’s the US administration and the US administration wasn’t offering the right sort of deal.

‘So yes, what we’ve ended up with is 25 per cent tariff for an unlimited amount of exports to the US market.

‘And we need to remember there are two good things here. One is that we have that business certainty that we are not shifting around in the level of tariffs, but also that we’re not paying 50 per cent like the rest of the world.

‘We’re the only country that is paying 25 per cent tariff, where our competitors are paying 50 per cent. So that does give us a small competitive advantage.’

Cabinet minister Liz Kendall insisted the Government is ‘working hard still’ to bring steel tariffs down to zero.

‘We are the only country in the world who have this lower rate of tariffs,’ the Science, Innovation and Technology Secretary said.

Challenged on the steel tariffs not being zero, as was promised, Ms Kendall added: ‘I understand and we’re working hard still on that and many other aspects of the trade deal.’ 

Tory MP Andrew Griffith, the shadow business and trade secretary, said: ‘The PM claimed credit for negotiating steel tariffs to zero.

‘Now it turns out that was untrue and it’s actually 25 per cent. Either his maths or his relationship with the truth clearly needs some work.’

Liberal Democrat deputy leader Daisy Cooper said: ‘It looks like the Government has thrown in the towel instead of fighting to stand up for the UK steel industry.

‘We were told US tariffs on UK steel would be lifted completely, now that’s turned out to be yet another promise Trump has reneged on.

‘It just shows Trump is an unreliable partner and that rewarding a bully only gets you so far.

‘The best way to protect our economy is to stand with our allies in Europe and the Commonwealth and end Trump’s damaging trade war for good.’

David Henig, a former UK trade negotiator now at the ECIPE think-tank, said: Once again I fear a UK Government has mistaken having a trade deal dictated to them for their own negotiating brilliance, and not realised how difficult it would be to achieve more with the US such as with regard to steel.’

Over the weekend, Liam Byrne, the Labour chairman of the House of Commons’ Business and Trade Committee, said Mr Trump’s state visit is ‘no mere pageant’

He warned the Government that ‘we can’t escape the truth that Britain now trades with its biggest partner on terms that are worse than the past’.